As of the close on September 24th at 16:00 Eastern Time, the three major U.S. stock indices all rose collectively, with Chinese concept stocks generally surging. The NASDAQ Golden Dragon China Index jumped by over 9%, marking the largest single-day increase since 2022. Today's A-shares are once again a sea of Chinese red! The offshore renminbi against the U.S. dollar also skyrocketed in sync, breaking through the 7.0 threshold this morning and returning to the 6s, reaching a new high in 16 months. The situation is looking very positive, demonstrating the strong optimism of both domestic and international markets for China's economic stimulus policies! As opportunities arise, how should one choose?
Why have Chinese assets surged?
The NASDAQ Golden Dragon China Index includes Chinese assets listed in the U.S., and the reason for yesterday's surge is that the undervaluation of Chinese assets has been noticed by international funds. The reason is that after entering the U.S. interest rate reduction cycle, the central bank unexpectedly released a package of policy measures yesterday, which can be described as a "super strong heart injection" for the A-share market! While boosting confidence, a stable renminbi exchange rate has reduced exchange rate risks, greatly increasing the attractiveness of investing in the Chinese market and significantly enhancing the appeal of Chinese assets, presenting new investment opportunities for global investors.
Advertisement
Historically, similar events such as the rebound of the NASDAQ Golden Dragon China Index after a sharp decline in October 2018, and the renminbi exchange rate reform in August 2015, have shown the market's sensitive response to China's economic policies and corporate fundamentals. These historical events indicate that the market is highly sensitive to policy changes and adjustments in economic fundamentals, and significant fluctuations may occur in the short term. Investors need to closely monitor policy trends and economic data to cope with potential market fluctuations.
Can A-shares reverse from here? What assets should investors pay attention to?
Entering the Fed's interest rate reduction cycle, the policy space has expanded in a loose monetary environment. The focus now is to see the effectiveness of the central bank's "combination punch" and how long it can last. As for the most significant favorable policy, we believe it is the swap facility and loan repurchase, which encourages institutions to loan and buy stocks without limits! The move to encourage institutions to leverage directly stimulates the rise of Chinese assets and has a great deal of imagination space! We believe this wave of the market may continue, and we will continue to closely monitor the market and the implementation of policies with investors.
As for which assets investors should pay attention to:
1. A-share core growth assets: The new round of mergers and reorganizations policy will give birth to a large number of bull stocks, benefiting securities, the ChiNext board, and the STAR Market stocks that have previously been oversold. Investors are advised to layout the A-share growth core - ChiNext Index at a low point in this cycle. #Tianhong ChiNext ETF Linkage (Class C: 001593)
2. Hong Kong stock market - Hang Seng Tech: In the long term, the fundamentals of the Hong Kong stock market rely more on the domestic economy. This policy has released a positive signal, benefiting the Hong Kong stock market. In addition, because the Hong Kong stock market is more sensitive to external liquidity, coupled with the linked exchange rate system, the interest rate reduction has brought benefits to the Hong Kong stock market. Recently, the transaction volume of the Hong Kong Stock Exchange market has surged, and the Hang Seng Index has already achieved ten consecutive days of sunshine, breaking the record of nine consecutive days of sunshine in 21 years. #Tianhong Hang Seng Tech (Class C: 012349)
3. High dividend assets - Dividend category: If investors pursue relatively certain assets as a base for their portfolio, they can choose high dividend dividend category assets. Currently, the dividend rate of dividend category assets is still high, the dividend investment value driven by high dividends is high, and they have a stable dividend ability. As long-term interest rates decline, dividend category assets are still sought after by institutions and investors! It is also worth looking forward to in the future. #Tianhong China Securities Bank ETF Linkage (Class C: 001595)Tianhong Fund Manager Zhang Ge: The market has rebounded comprehensively under the stimulus of a favorable policy combination, and the follow-up market is expected to initiate a valuation repair trend. We have observed: 1. The policy combination directly benefits dividend and consumer stocks, which can easily stabilize the index and enhance investment sentiment; 2. The market has risen across the board, indicating a consensus among various funds on the current market status and the effectiveness of policies; 3. Subsequent stimulating policies in fiscal and industrial aspects can still be anticipated. The market has fallen significantly in the previous period, and there is a need for repair in various aspects such as market sentiment and technical indicators.
In the future, it is expected that policies aimed at stabilizing growth will continue to advance. Under a loose economic policy, the economic fundamentals will continue to repair, and the economy is expected to continue to show a positive trend. At this point, it is possible to actively layout, but remind everyone to chase the rise reasonably. We will pay close attention to market trends with everyone! Accompany everyone on the investment journey!